BOOK

IV, TITLE II:CONTRACTS he had serious intention to be

CHAPTER 2: ESSENTIAL REQUISITES OF A bound
CONTRACT Types:
1. Simple - 1 kind only
Types of Requisites in a Contract: 2. Complex 2 or more offers.
1. Essential
a. Consent However what constitutes the JURIDICAL
b. Object TIE in a complex offer?
c. Cause a. It would depend in the nature of the
2. Special complex offer made
a. Delivery in real contracts i. If just accepting partially and
b. Form- solemn contracts rejecting to the rest, there is
3. Extraordinary a contract in the portion
a. Price in a contract of sale accepted
ii. If required to accept in its
COMMON totalty, partial acceptance is
- need to be complied with in ALL contracts to NOT acceptance but a
be valid counteroffer. Eg: house and
- without one, it is void or inexistent lot
1. Real Contracts need delivery iii. If DIVISIBLE in nature, partial
2. Formal Contracts requires a form + COC ; if acceptance will create the
did not comply with FORM not valid contract in that portion. Eg:
house and carabao
CONSENT b. By Agreement
Most complicated
2 Elements: 2. ACCEPTANCE by the offeree
1. OFFER by the offeror Requisites:
Requisites: 1. ABSOLUTE AND UNCONDITIONAL
a. Definite clearly shows what type of - slight deviation from original tenor is
contractif there is doubt, decline a counter-offer. Art. 1319
b. Complete- all aspects and offeree must - no tie created; still in its
know conceptualization stage
c. Directed to offeree or the world 2. CAPACITY OF OFFEREE TO ACCEPT
d. Capacity to make an offer 3. DIRECTED TO OFFEROR ONLY
e. Animus contrahendi ( intention to be 4. ANIMUS CONTRAHENDI - intention
bound if the offer is accepted) to be bound
a. If made in JEST, not valid; still can 5. MADE WITHIN A REASONABLE TIME
be a cause of action to that who even if there is no period. Check
made the offer. No contract. Joke facts if all are present
time
b. If with mental reservation, there Amplified Acceptance
is absence of animus but - may result to a contract
considered valid because of - ostensibly appear to change tenor
ESTOPPEL appear to the - not a counter-offer. Original contract
offeree that there is a valid offer is a valid contract to which oferee
and offeree to validly accept. may compel offeror to comply
There is a representation of the - eg: I will sell you 10 sacks for 500
individual making the offer that pesos. Accepts and says okay I will
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 buy 20. electronic data message or electronic document, or
NOTE: once there is the concurrence of OFFER & that any or all of the elements required under
ACCEPTANCE, juridical tie exists.
existing laws for the formation of the contracts is

Can the offer be withdrawn? expressed, demonstrated and proved by means of
Ans: Yes, as long as tie has not yet been electronic documents.
constituted.
(2) Electronic transactions made through
How about Acceptance: networking among banks, or linkages thereof with
1. Tolentino still may be withdrawn; if other entities or networks, and vice versa, shall be
acceptance has not yet been communicated and deemed consummated upon the actual dispensing
knows by offeror, still may be withdrawn
of cash or the debit of one account and the
2. Manresa- even if offeror has not yet acquired
corresponding credit to another, whether such
the knowledge of acceptance, there is already a
tie and offeree can no longer withdraw. transaction is initiated by the depositor or by an
- perfection of offeree is already done authorized collecting party: Provided, that the
before offeror followed obligation of one bank, entity, or person similarly
- perfection tends to occur prior to the situated to another arising therefrom shall be
knowledge of the offeror considered absoluteand shall not be subjected to
- Art. 1319: as long as acceptance has
the process of preference of credits.
not yet been acquired by offeror,
may be withdrawn anytime.
- If done face-to-face, no problem.
Theories on Acceptance
3 Ways acceptance can be done: MANIFESTATION EXPEDITION RECEPTION COGNITION
1. Correspondence letters - who offers 2 STEPS: 3 STEPS: 4 STEPS:
2. Telephone/Cellphone considered face- manifests the 1. 1. 1.
intention to Manifestation Manifestation Manifestion
to-face; moment offer and acceptance accept, tie is made write it 2. Sending 2. Sending
are in the phone, there is a perfection of - not necessary down 3. Offeree 3. Receiving
contract; presumed entered into where that the offeror 2. Send letter actually 4.
must actually - the release; receives in a KNOWLEDGE
the offeror is at. know there is a position to - receive,
3. Electronic Communication thru instant -Manresas theory juridical tie know the open, read,
messages- VALID tie is created contents know the
ONE STEP: from the - once inside acceptance
1. Manifestation release of the PO Box but
*Code of letter not yet read, Art. 1319 OF
RA 8792: E-COMMERCE LAW OF THE PHILIPPINES Commerce, Art. JT is created. NCC
54 That is the
SEC. 16. Formation and Validity of Electronic reckoning
Contracts. - (1) Except as otherwise agreed by point

Liability:
the parties, an offer, the acceptance of an offer and COMMERCIAL CONTRACT CIVIL CONTRACT
such other elements required under existing laws One or both parties are in the Only one instance and not
for the formation of contracts may be expressed in, activity for profit regularly regularly; once in a lifetime
SOLIDARY liability JOINT liability
demonstrated and proved by means of electronic

data message or electronic documents and no Acceptance by Silence (TOLENTINO)
contract shall be denied validity or enforceability on Silence may be construed as consent
the sole ground that it is in the form of an Requisites:

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 1. Duty of the offeree to express refusal 5. Revocation of the offer before the
2. Silence on part of the offeree to express knowledge of acceptance as long as offer
refusal does not create tie yet
3. Concurrence between the effet of silence
and undisclosed will of the offeree. Even if the offeree gives a period, offeror may still
withdraw the offer; may be withdrawn anytime and
Article 1870. Acceptance by the agent may also be express, or no liability for damages.
implied from his acts which carry out the agency, or from his silence
or inaction according to the circumstances. (n) However, there are exceptions:
Article 1871. Between persons who are present, the acceptance of 1. If there is an option contract
the agency may also be implied if the principal delivers his power of Article 1324. When the offerer has allowed the offeree a
attorney to the agent and the latter receives it without any objection. certain period to accept, the offer may be withdrawn at
(n) any time before acceptance by communicating such
Article 1872. Between persons who are absent, the acceptance of withdrawal, except when the option is founded upon a
the agency cannot be implied from the silence of the agent, except: consideration, as something paid or promised. (n)
(1) When the principal transmits his power of attorney to the agent,
who receives it without any objection;
(2) When the principal entrusts to him by letter or telegram a power 2. Applicability of Art. 19 NCC
of attorney with respect to the business in which he is habitually Article 19. Every person must, in the exercise of his rights
engaged as an agent, and he did not reply to the letter or telegram. and in the performance of his duties, act with justice, give
(n) everyone his due, and observe honesty and good faith.
Article 1873. If a person specially informs another or states by public -shotgun provision
advertisement that he has given a power of attorney to a third -use if you do not know what the
person, the latter thereby becomes a duly authorized agent, in the
former case with respect to the person who received the special basis is
information, and in the latter case with regard to any person. - abuse of right
The power shall continue to be in full force until the notice is Option Contract
rescinded in the same manner in which it was given. (n)
Requisites:
Forms of Acceptance
Article 1320. An acceptance may be express or implied. (n) 1. Give one party in favor of the other the
May also be presumed: presumed from power to decide whether to celebrate the
LAW. contract or not with obligation on the part
Article 1057. Within thirty days after the court has issued
of the debtor presence of COC
an order for the distribution of the estate in accordance 2. Concession is exlusive
with the Rules of Court, the heirs, devisees and legatees 3. Concession is for a fixed period
shall signify to the court having jurisdiction whether they
accept or repudiate the inheritance.
4. Concessions is no other condition
If they do not do so within that time, they are deemed to
dependent on the sole will of the debtor
have accepted the inheritance. (n) Still need COC
o Failure on the part of the heir to Object: to GIVE
reject the inheritance in 30 days o Eg: school enrollment, pay a
from notice from the order of the reservation fee. Object is to give
court judicial partition of the estate MONEY FOR RESERVATION option
accept thru presumption money. Consideration period to
When offer becomes ineffective accept or forfeit
Article 1323. An offer becomes ineffective upon the death, civil o Need a consideration even if given a
interdiction, insanity, or insolvency of either party before acceptance
is conveyed. (n) prices
1. Thru death, civil interdiction, insanity, o If just a period, amy still withdraw
insolvency o Not part of the purchase price
2. Rejection
3. Lapse of period of offer Earnest Money v. Option Money
Article 1482. Whenever earnest money is given in a contract of sale,
4. Qualified/conditioned acceptance it shall be considered as part of the price and as proof of the
Article 1321. The person making the offer may fix the time,
perfection of the contract. (1454a)
place, and manner of acceptance, all of which must be
complied with. Earnest Money Option Money

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Already acceptance not necessarily creates or annullable, even though there may have been no
damage to the contracting parties: (1) Those where one of
- tie is already the contract the parties is incapable of giving consent to a contract;
established not part of the purchase - valid until annulled
- this is part of the price - need petition to annul
purchase price Note: if both parties are incapacitated, it
is defective. UNENFORCEABLE
Option Contract v. Buy & Sell CONTRACT.
Article 1479. A promise to buy and sell a determinate thing for a Article 1403. The following contracts are unenforceable,
price certain is reciprocally demandable. An accepted unilateral unless they are ratified: (3) Those where both parties are
promise to buy or to sell a determinate thing for a price certain is incapable of giving consent to a contract.
binding upon the promisor if the promise is supported by a
-- they are valid but cannot be enforced
consideration distinct from the price. (1451a)
Option Contract Buy & Sell
Only committing the Involves sale of real Exceptions to the Rule:
offeror in case accepted property 1. Contract for purpose of necessities
by the offeree to enter a contract to sell a. Support in FC : dwelling, food,
contract of sale not only offeror bound clothing, transportation, education
No legal commitment to to enter into contract 2. Savings Deposit in fact a contract of loan
proceed with the but also the offeree; not 3. Entered by a MINOR who actively
contract allowed to withdraw misrepresented age; ESTOPPEL
effected when a. Involves sale and delivery of
conditions are fulfilled necessaries to the minor
expressed in the b. Involves a natural obligation and is
contract to buy and sell voluntarily delivered by the minor
buyer not option for c. Marriage settlement or donation
absolute sale until propter nuptias
conditions are fulfilled d. Life, health or accident insurance
(conditional buy and taken on the life of the minor
sell) *Requirements:
1. ACTIVE misrepresentation

Advertisements - mere silence to inform the other
Article 1325. Unless it appears otherwise, business advertisements of party of the defect in his capacity is NOT
things for sale are not definite offers, but mere invitations to make sufficient to apply this
an offer. (n) 2. PHYSICAL attributes must also show
Article 1326. Advertisements for bidders are simply invitations to
make proposals, and the advertiser is not bound to accept the - lead to believe the legal age
highest or lowest bidder, unless the contrary appears. (n)
Deaf-mute: know how to read and write
INCAPACITYCannot give consent Imbecile: voidable if entered into by insane
Article 1327. The following cannot give consent to a contract: (1) VALID- if entered into during a lucid interval.
Unemancipated minors;
Article 1328. Contracts entered into during a lucid interval
(2) Insane or demented persons, and deaf-mutes who do not know
are valid. Contracts agreed to in a state of drunkenness or
how to write. (1263a)
during a hypnotic spell are voidable. (n)
2. Incompetent
THREE CLASSES: Rule 93, Sec. 2 : Persons whom judicial guardians
1. Incapacity may be petitioned:
Exclusive to Art. 1327 ( minor, insane or 1. Civil interdiction
demented, deaf-mute who does not know 2. Hospitalized lepers
how to read and write) 3. Prodigal
- Makes the contract VOIDABLE 4. Deaf and demented unable to read and
write
Article 1390. The following contracts are voidable
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 5. Unsound mind 2. Absolute Disqualification
6. Persons who cannot take care of themselves - DQ for any and all types of contracts
because of age, disease, or weak mind
Article 1490. The husband and the wife cannot sell property to each
other, except: (1) When a separation of property was agreed upon in
broader and parties are not necessarily the marriage settlements; or (2) When there has been a judicial
incapacitated separation of property under article 191. (1458a)
Age- not a ground for incapacity unless a Article 1491. The following persons cannot acquire by purchase, even
at a public or judicial auction, either in person or through the
minor needs a judicial guardian mediation of another:
(1) The guardian, the property of the person or persons who may be
Valid or voidable? under his guardianship;
(2) Agents, the property whose administration or sale may have been
If the incompetent is with a judicial guardian intrusted to them, unless the consent of the principal has been given;
enters into a contract without the (3) Executors and administrators, the property of the estate under
intervention of the judicial guardian, it is administration; (4) Public officers and employees, the property of the
State or of any subdivision thereof, or of any government-owned
voidable. or controlled corporation, or institution, the administration of which
If incompetent is not incapacitated but no has been intrusted to them; this provision shall apply to judges and
judicial guardian yet, still valid. government experts who, in any manner whatsoever, take part in the
sale;
If incompetent and incapacitated, voidable (5) Justices, judges, prosecuting attorneys, clerks of superior and
inferior courts, and other officers and employees connected with the
administration of justice, the property and rights in litigation or
*Art. 1327: only incompetence and incapacitated. levied upon an execution before the court within whose jurisdiction
or territory they exercise their respective functions; this prohibition
includes the act of acquiring by assignment and shall apply to
lawyers, with respect to the property and rights which may be the
3. Disqualified object of any litigation in which they may take part by virtue of their
Contract is not only unenforceable or voidable but profession;
void. (6) Any others specially disqualified by law. (1459a)

Article 1329. The incapacity declared in article 1327 is subject to the Article 1782. Persons who are prohibited from giving each other any
modifications determined by law, and is understood to be without donation or advantage cannot enter into universal partnership.
prejudice to special disqualifications established in the laws. (1264) (1677)
Incapacity to Contract Disqualification to Contract
It refers to those who are prohibited from entering
Restrains the exercise of the Restrains the very right itself
into a contract with certain persons with regard to right to contract
certain property under certain circumstances and Can still enter into a contract but Prohibited from entering a
not to those who are incapacitated to give their thru parent or guardian particular contract
Subjective circumstances of Special incapacity based on
consent to a contract. certain persons which compel PUBLIC POLICY AND MORALITY
law to suspend for a definite or
Types of Disqualification: indefinite period their right to
contract
1. Relative Disqualification Makes contract voidable Makes contract void
- only to particular contracts
- only to enter certain types of
contracts
- husband and wife are not allowed to
donate each other except for VICES OF CONSENT
reasonable value Article 1330. A contract where consent is given through mistake,
violence, intimidation, undue influence, or fraud is voidable. (1265a)
- insolvent or bankrupt
Fraud
Article 1338. There is fraud when, through insidious words or
Article 133. Every donation between the spouses during the
machinations of one of the contracting parties, the other is induced
marriage shall be void. This prohibition does not apply when the
to enter into a contract which, without them, he would not have
donation takes effect after the death of the donor.
agreed to. (1269)
Neither does this prohibition apply to moderate gifts which the
Dolo Causante- Art.
spouses may give each other on the occasion of any family rejoicing. Dolo Incidente- Art.
1338 1171
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Only remedy is payment Cause of action not only consent.
To determine the degree of intimidation, the age, sex and condition
for damages for damages but only for of the person shall be borne in mind. A threat to enforce one's claim
specific performance through competent authority, if the claim is just or legal, does not
Fraud inflicted from the Fraud inflicted in the vitiate consent. (1267a)
Article 1336. Violence or intimidation shall annul the obligation,
conception of the performance of although it may have been employed by a third person who did not
contract; the impelling obligation take part in the contract. (1268)
motive for the other May also be known as duress
party to enter into the Violence Intimidation
contract External Internal
Prevents the expression Influences the operation
If consent is vitiated, it is given; not perfect act of of the will substituting it of the will, inhibiting it in
free will voidable. Not the absence of consent with a material act such a way that the
dictated by another expression is apparently
General rule: fraud of 3rd person does not vitiate that of a person who has
consent; bust be used by parties. freely given his consent
Exception to the rule: Physical compulsion Moral compulsion
1. Created a substantial mistake and the same is Requisites: Requisites:
mutual a) Force employed a) one of the parties
2. 3rd person makes a misrepresentation with to wrest consent must compelled to give his
complicity or knowledge but without objection of be serious or consent by a reasonable
favored contracting party (conspiracy) irresistible and well-grounded fear
b) Must be the of an evil
Undue Influence determining cause for b) evil must be imminent
Article 1337. There is undue influence when a person takes improper
advantage of his power over the will of another, depriving the latter
the party upon whom and grave
of a reasonable freedom of choice. The following circumstances shall it is employed in c) evil must be unjust
be considered: the confidential, family, spiritual and other relations entering into the d) evil must be the
between the parties, or the fact that the person alleged to have been
unduly influenced was suffering from mental weakness, or was
contract determining cause for
ignorant or in financial distress. (n) the party upon whom it
Influence that deprives a person of his free is employed in entering
agency into the contract
TEST: whether or not the influence exerted
has so overpowered or subjugated the mind Mistake
Article 1333. There is no mistake if the party alleging it knew the
of the contracting party as to destroy his doubt, contingency or risk affecting the object of the contract. (n)
free agency, making him express the will of 1. Mistake of act
another rather than his own. Applies to vitiate consent
2. Mistake of Law
*Distinguish from REVERENTIAL FEAR:
Does not apply
- not result to a defect in consent
Article 3. Ignorance of the law excuses no one from
- still a valid contract compliance therewith. (2)
- Eg: fear of disappointing father so still marry a General rule: mistake of law will not vitiate consent
person fixed to you even if you do not want to Exception: Article 1334. Mutual error as to the legal effect of an
agreement when the real purpose of the parties is frustrated, may
Violence & Intimidation vitiate consent. (n)

Article 1335. There is violence when in order to wrest consent,
serious or irresistible force is employed. Requisites:
There is intimidation when one of the contracting parties is
1. Mistake must be with respect ot the legal effect
compelled by a reasonable and well-grounded fear of an imminent
of an agreement
and grave evil upon his person or property, or upon the person or
2. Mistake must be mutual
property of his spouse, descendants or ascendants, to give his
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3. Real purpose of the parties must have been Legality or illegality will Legality or illegality will
frustrated affect existence or not affect existence of a
validity of the contract contract
Illiterate
Article 1332. When one of the parties is unable to read, or if the Note: motive may be regarded as cause when the
contract is in a language not understood by him, and mistake or
fraud is alleged, the person enforcing the contract must show that contract is conditioned upon the attainment of the
the terms thereof have been fully explained to the former. (n) motive of either contracting party.
Not voidable
Gives illiterate a defense to the contract CHAPTER 3: FORMS OF CONTRACTS
Still a valid contract
1. IN WRITING
a. Donations of personal property
Simulation of Contracts whose value exceeds 5000 pesos
Article 1345. Simulation of a contract may be absolute or relative. Article 748. The donation of a movable may be made orally
The former takes place when the parties do not intend to be bound or in writing.
at all; the latter, when the parties conceal their true agreement. (n) An oral donation requires the simultaneous delivery of the
Article 1346. An absolutely simulated or fictitious contract is void. A thing or of the document representing the right donated.
relative simulation, when it does not prejudice a third person and is If the value of the personal property donated exceeds five
not intended for any purpose contrary to law, morals, good customs, thousand pesos, the donation and the acceptance shall be
public order or public policy binds the parties to their real made in writing. Otherwise, the donation shall be void.
agreement. (n) (632a)

OBJECT b. Sale of a piece of land or any interest
Article 1347. All things which are not outside the commerce of men,
therein through an agent
including future things, may be the object of a contract. All rights
Article 1874. When a sale of a piece of land or any interest
which are not intransmissible may also be the object of contracts.
therein is through an agent, the authority of the latter shall
No contract may be entered into upon future inheritance except in
be in writing; otherwise, the sale shall be void. (n)
cases expressly authorized by law.
All services which are not contrary to law, morals, good customs,
public order or public policy may likewise be the object of a contract. c. Agreements regarding payment of
(1271a)
interest in contracts of loan
Article 1348. Impossible things or services cannot be the object of
Article 1956. No interest shall be due unless it has been
contracts. (1272)
expressly stipulated in writing. (1755a)
Article 1349. The object of every contract must be determinate as to
its kind. The fact that the quantity is not determinate shall not be an
obstacle to the existence of the contract, provided it is possible to d. Antichresis
determine the same, without the need of a new contract between Article 2134. The amount of the principal and of the
the parties. (1273) interest shall be specified in writing; otherwise, the
contract of antichresis shall be void. (n)
CAUSE
In a reciprocal obligation, causes are: payment and
to deliver the thing 2. PUBLIC DOCUMENT/ INSTRUMENT
a. Donations of immovable property
*Distinguished from Motive
Article 749. In order that the donation of an immovable
may be valid, it must be made in a public document,
CAUSE MOTIVE specifying therein the property donated and the value of
Direct or most Indirect or remote the charges which the donee must satisfy.
The acceptance may be made in the same deed of donation
proximate reason of a reasons or in a separate public document, but it shall not take
contract effect unless it is done during the lifetime of the donor.
Objective or juridical Psychological or purely If the acceptance is made in a separate instrument, the
donor shall be notified thereof in an authentic form, and
reason of a contract personal reasons this step shall be noted in both instruments. (633)
Always the same Differ from each
contracting party

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 b. Partnerships where immovable
property or real rights are
contributed to the common fund
Article 1771. A partnership may be constituted in any form,
except where immovable property or real rights are
contributed thereto, in which case a public instrument shall
be necessary. (1667a)

Article 1773. A contract of partnership is void, whenever
immovable property is contributed thereto, if an inventory
of said property is not made, signed by the parties, and
attached to the public instrument. (1668a)

3. WRITING PUBLIC DOCUMENT
REGISTERED
a. Chattel mortgages

Article 2140. By a chattel mortgage, personal property is
recorded in the Chattel Mortgage Register as a security for
the performance of an obligation. If the movable, instead
of being recorded, is delivered to the creditor or a third
person, the contract is a pledge and not a chattel
mortgage. (n)

b. Sales or transfers of large cattle


Article 1358. The following must appear in a public document:

(1) Acts and contracts which have for their object the creation,
transmission, modification or extinguishment of real rights over
immovable property; sales of real property or of an interest therein
are governed by articles 1403, No. 2, and 1405;

(2) The cession, repudiation or renunciation of hereditary rights or of

those of the conjugal partnership of gains;

(3) The power to administer property, or any other power which has
for its object an act appearing or which should appear in a public
document, or should prejudice a third person;

(4) The cession of actions or rights proceeding from an act appearing

in a public document.

All other contracts where the amount involved exceeds five hundred
pesos must appear in writing, even a private one. But sales of goods,
chattels or things in action are governed by articles, 1403, No. 2 and
1405. (1280a)

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